It’s almost tax time again!

30th June is approaching fast, and timing is important with this deadline.  As such the time to act is now.

Below is a guide on some of the main things to consider for yourself and your business at this time.

Our Top Tax Tips

Pay June quarter employee super contributions now

Pay June quarter super contributions this financial year if you want to claim a tax deduction in the current year. The next quarterly superannuation guarantee payment is due on 28 July 2024.  However, you can choose to make the payment early and bring forward the tax deduction instead of waiting another 12 months.

There are cutoffs with super clearing accounts to be aware of so it’s best to act on this immediately.

You can also make contributions for yourself. The 2023 super concessional contribution rate is $27,500. This is increasing from 1 July 2024 to $30,000.

Individuals are able to make personal concessional contributions from pre-tax funds to claim a tax deduction for 2024. This is a great way for an additional tax deduction and also to build wealth and can help offset untaxed income you may have from investment income or capital gains. There is also the possibility to catch up contribution limits in prior years in some circumstances. There are some important rules around this so it’s best to contact us to discuss this area if this is of interest.

$20,000 Instant Asset Write Off to be extended to 30 June 2025

Announced in the 2023/24 Federal budget, small businesses with aggregated turnover of less than $10 million are able to deduct the full cost of eligible depreciating asses costing less than $20,000. The government extended this measure to the 30th June 2025 in their recent budget.

It’s important to note though that this is not presently passed parliament for next year.

The asset must have been purchased, used or installed between 1 July 2023 and 30th June 2024. The threshold applied on a per-asset basis.

Write-off bad debts

To be a bad debt, you need to have brought the income to account as assessable income and given up all attempts to recover the debt. It needs to be written off your debtors’ ledger by 30 June. Its best to have this documented and genuine attempts made to recover these debts.

Stock

For tax purposes, businesses that trade stock are required to complete an annual stocktake as at the 30 June. It’s important that you complete this in a reliable and efficient manner to ensure accuracy. As part of the stocktake, you should identify any old, obsolete or damaged stock that can be written off for these purposes.

Prepayments

Small businesses are allowed to claim a full deduction for prepayments when paid off up to 12 months. Such prepayments as rent, insurance and leases could be paid prior to 30 June and be fully deductible.

Realise any capital losses and reduce gains

It’s beneficial to look to see if you can reduce the tax effect of any capital gains you have made during the year by realising any capital losses – that is, sell the asset and lock in the capital loss. These need to be genuine transactions to be effective for tax purposes so please keep this in mind but it’s important that this is reviewed with your personal circumstances.

Other Things To Consider

Superannuation Guarantee

The Superannuation Guarantee (SG) rate will rise from 11% to 11.5% on 1 July 2024.

Payroll Software

It’s a good idea to check also that your payroll software incorporates the change in the Super rate to commence the new financial year. It worth reviewing this as part of your new payroll year as we have seen instances when this has not been completed resulting in businesses underpaying superannuation unknowingly.

Don’t forget about finalising your single touch payroll for the 2024 period. A final declaration of the payroll generally needs to be made by the 14th July 2024.

What Is On The Tax Office’s Radar?

Rental Properties

The ATO has been very active in their media in relation to what they will be considering with rental properties this year.

Their focus will be around the following:

• Refinancing and redrawing on loans: You can claim interest on loans to purchase the investment property, however, if equity is drawn down out of the property and used for other personal means (holidays, car etc) and not relating to the property then the loan expenses need to be apportioned. The ATO is matching data from financial institutions to review these transactions.
• Repairs and Maintenance and capital improvements: You can not claim repairs for the property when first purchased, also the ATO are reviewing to ensure that only expenses that relate to the wear and tear resulting from the property being rented out are claimed immediately to bring the property back to its original state and not structural improvements or replacement of assets within the property which needs to be written off over time.

How We Can Help

For assistance with your personal and/or business taxation matters, please get in touch with our accounting team below or call (02) 4969 6600.